Jamaica Broilers pursuing more acquisitions
Poultry producer Jamaica Broilers Group, JBG, has a positive outlook on its 2020 financial year as it continues to seek out acquisitions in the United States.
Group profit increased by 17 per cent to $2.37 billion for the full year ending April 2019. On a per-share basis, earnings amounted to $2.30, compared with $1.64 in 2018.
“JBG continues to look for growth prospects. We expect that the Jamaica and Haiti operations will expand at single-digit rates. We continue to explore more growth opportunities in the USA, both from acquisition as well as organic,” Senior Vice-President of Finance Ian Parsard told the Financial Gleaner.
The focus on the US follows high double-digit growth in revenue in that market, outpacing single-digit growth in Jamaica and Haiti.
“We continue to trust that God will guide us and we have a positive outlook for fiscal year 2020. We expect growth to continue, and the final outturn will, to a large extent, be influenced by the success of acquisition targets being explored,” Parsard said.
In August 2018, JBG announced the acquisition of a feed mill in Georgia, called Crystal Farms, through a foreign subsidiary aimed at adding US$65 million to its annual turnover. In October 2017, JBG announced the acquisition of a hatchery in Pennsylvania, which it renamed International Poultry Breeders Hatcheries. Those recent acquisitions added to its US subsidiaries, including Wincorp International USA, Consolidated Freight and Shipping USA, and International Poultry Breeders.
Jamaica Broilers made $55 billion in annual revenue, up 14 per cent year-on-year. The Jamaica operations account for just under two-thirds of total revenue at $36.2 billion, followed by the US at one-third with $20.16 billion, Haiti at 4.2 per cent or $2.4 billion, and other Caribbean territories at $616 million. Eliminations due to inter-company transactions amounted to $4.2 billion.
Despite the growth, the group also experienced higher-than-usual expenses, in part due to increased distribution and also one-off costs associated with acquisitions. These flattened much of the revenue growth but the group benefited from increased foreign currency activity.
“As the company grows, primarily in the USA, associated costs, including distribution and administrative, also grow, and is particularly exaggerated if there is a devaluation of the Jamaica dollar compared to the US dollar. In the year just ended, there are cost related to the feed mill in Georgia, the Pennsylvania hatchery, and the formation cost of JBG Stockholders Nominee Ltd (also known as the Shareholders Trust), which did not exist in the 2018 financial year,” Parsard explained.
Post its year-end period, an external loan to West Indies Petroleum Limited was liquidated by way of a debt purchase and novation agreement between JBG and the Bank of Nova Scotia Jamaica.
A novation agreement involves the change of ownership of land, assets or a loan.
The loan was originally set to mature in 2023 with annual repayments of US$2.64 million. It related to financing offered to WIP to purchase ethanol assets formally owned by JBG. The balance on the loan was roughly J$1.4 billion.